Coronavirus: China doesn’t need big economic stimulus, advisers and former officials say
- People’s Bank of China urged not to engage in ‘quantitative easing’ like other major central banks to ensure discipline in fiscal spending
- Details of Beijing’s economic support plan to be unveiled at National People’s Congress
China does not need to launch a large economic stimulus effort to address the damage being done by the coronavirus pandemic, a group of government advisers and former officials said at the weekend.
In particular, they said, there was no need to copy the quantitative easing policy employed by a number of major central banks around the world.
Beijing is expected to announce details of additional economic support measures at the annual meeting of the National People’s Congress this week.
However, there is an ongoing debate in policymaking circles about the size of the programme and how to implement it, particularly on whether to keep control of fiscal spending by avoiding an excess monetary stimulus.
The Group of 20 agreed in March that member countries would inject more than US$5 trillion into the global economy to protect jobs and incomes and “do whatever it takes” to tackle the public health crisis.
The US Federal Reserve has cut interest rates to zero, promised unlimited, open-ended support for the economy – including the purchase of corporate and municipal bonds – while Congress passed a US$2.2 trillion aid package, the largest in history, and is debating whether to double this.